Figure 9-11

-Refer to Figure 9-11.When the tariff is imposed,how much do consumers gain or lose
A)lose $500
B)lose $900
C)gain $500
D)gain $900

Question

Figure 9-11
 
-Refer to Figure 9-11.When the tariff is imposed,how much do consumers gain or lose
A)lose $500 
B)lose $900 
C)gain $500 
D)gain $900

Quizplus · Accepted Answer

When the tariff is imposed, the price increases from $1000 to $1200. As a result, the quantity demanded decreases from 8 units to 6 units. The consumer surplus before the tariff was (1/2)($1000 - $700) × 8 = $1600. After the tariff, the consumer surplus is (1/2)($1000 - $600) × 6 = $900. Therefore, consumers lose $700 of consumer surplus, which is represented by choice letter B.

Figure 9-11 -Refer to Figure 9-11.When the Tariff Is Imposed,how Much Do